By: Emily Johston
Have you ever been confused by employment law? You’re not the only one. Employment law is a complicated topic which spans numerous pieces of Canadian legislation, like the Employment Standards Act, the Human Rights Code, and more.[1] While close in proximity, Canada and the United States have implemented different employment laws.
What’s the difference between employment law and labour law?
Employment law and labour law differ. Employment law refers to the laws surrounding the relationship between employees and employers in a non-unionized company. On the other hand, labour law relates to the laws surrounding the relationship between employees and employers in a unionized company.[2] A unionized company means the employees are protected by a collection of individuals who bargain for specific working conditions with the employer.[3]
Some differences between the United States and Canada Employment Law
The US and Canada have different employment laws. Some popular topics where there are stark differences between the countries include:
Termination
Termination ends an employee’s contract with the employer.[4] In Canada, employers typically have to give employees notice or payment for their termination “without cause.” This is not the typical case in the US. Most employers can terminate an employee’s job “at will” even if they don’t have a reason for doing so.[5]
Layoff
A layoff occurs when an employee temporarily loses their job, but the plan is that the employee might return to the position at some point in the future. The employment contract might not end if an employee is laid off depending on what is in the agreement. Canadian legislation permits layoffs, regulates whether notice is required, and sets out a period when the employee can be called back to return to their work before the layoff is considered a termination.[6] A layoff is similar in the US, and different legislation regulates layoffs depending on the company’s size.[7]
Constructive Dismissal
In Canada, employers can’t just decide to change an employment agreement independently. If this occurs, the employee may be able to claim “constructive dismissal,” which compensates an employee as though they were terminated without cause. This is not the case in the US. Employers can decide to change an employment agreement on their own without considering “constructive dismissal” because they can terminate an employee “at will” if they so choose.[8]
Wrongful Dismissal
In Canada, wrongful dismissal occurs when the employer terminates an employee’s job by failing to provide notice or appropriate payment when terminating an employee without cause. Constructive dismissal is also a type of wrongful dismissal.[9] In the US, wrongful termination typically occurs when an employee loses their job in breach of their employment agreement or another employment law.[10]
Severance
Severance is the amount paid to an employee after an employment relationship has come to an end. Sometimes severance can extend benefits to the employee. Canada legislates the amount of severance pay an employee will receive depending on several factors- like which province you are located in, your employment agreement, the reason for your dismissal, and the time period you worked for the employer.[11] In the US, severance is a similar concept, yet the government does not regulate it. Instead, severance pay depends on what is included in the employment contract.[12]
Employment insurance
Canada’s Employment Insurance (EI) program provides benefits to individuals who have lost their jobs to support them until they can find a new job. To be eligible for EI, the individual must have lost their job without cause and must be searching for a new job.[13] This program is operated through the Canada Employment Insurance Commission (CEIC), Employment and Social Development Canada (ESDC) and Service Canada.[14] Similarly, unemployment insurance in the US provides benefits to individuals who have lost their jobs without cause and are currently searching for a new job. This program is operated by the Department of Labour, but the different states have different guidelines regarding unemployment insurance.[15]
Disclaimer: The information provided in this response is for general informational purposes only and is not intended to be legal advice. The content provided does not create a legal client relationship, and nothing in this response should be considered as a substitute for professional legal advice. The information is based on general principles of law and may not reflect the most current legal developments or interpretations in your jurisdiction. Laws and regulations vary by jurisdiction, and the application and impact of laws can vary widely based on the specific facts and circumstances involved. You should consult with a qualified legal professional for advice regarding your specific situation.
[1] “What is Employment Law?” online: Dutton Employment Law < https://duttonlaw.ca/employment-law/>.
[2] Ibid.
[3] “What Is a Union? (How they Work and the Benefits They Provide)” (October 23 2022) online: Indeed < https://ca.indeed.com/career-advice/career-development/what-is-a-union>
[4] “What is the difference between “layoff” and “termination”” online: Myopencourt.org < https://myopencourt.org/ufaqs/what-is-the-difference-between-layoff-and-termination/>
[5] Cheryl V Reicin & Ellie Kang & Tom Stevenson “10 Key differences between Canadian and US Employment laws” (June 7 2022) online: Torys < https://www.torys.com/our-latest-thinking/publications/2022/06/10-key-differences-between-canadian-and-us-employment-laws>
[6] John Mastoras & Chanelle Wong “Temporary layoffs: What employers need to know” (July 26 2022) online: Norton Rose Fulbright < https://www.nortonrosefulbright.com/en-ca/knowledge/publications/7aeaf686/temporary-layoffs-what-employers-need-to-know>
[7] “WARN Act- Mandatory 60-Day Notice for Mass Layoffs and Business Closures” online: Schneider Wallace Cottrell Konecky LLP < https://www.schneiderwallace.com/practice-areas/employment/warn-act-mass-layoff-closure/>
[8] Fiona Brown & Aaron Bear “Key Differences in Employment Law between Canada and the United States” online: Aird Berlis<https://www.airdberlis.com/docs/default-source/default-document-library/key-differences-in-employment-law-between-canada-and-the-united-states.pdf?sfvrsn=7e365cd5_2>
[9] “Wrongful Dismissal in Ontario” online: Samfiru Tumarkin <https://stlawyers.ca/law-essentials/wrongful-dismissal/ontario/>
[10] “Wrongful termination” online: LII Wex <https://www.law.cornell.edu/wex/wrongful_termination>
[11] “Understanding your Severance Pay” (July 7 2022) online: Financial Consumer Agency of Canada <https://www.canada.ca/en/financial-consumer-agency/services/losing-job/understanding-severance-pay.html>
[12] “Severance Pay” online: U.S Department of Labour <https://www.dol.gov/general/topic/wages/severancepay>.
[13] “EI Regular Benefits” (December 18 2022) online: Employment and Social Development Canada <https://www.canada.ca/en/services/benefits/ei/ei-regular-benefit.html>
[14] “Canada Employment Insurance Commission (CEIC)” online: Government of Canada <https://www.canada.ca/en/employment-social-development/corporate/portfolio/ei-commission.html>.
[15] “What is Unemployment Insurance” online: Benefits.gov <https://www.benefits.gov/benefit/91>